From The Buyer Perspective: “Trifles Make Perfection, but Perfection is no Trifle.”
Dell - ‘Why should I pay £200 an hour for a three-year qualified UK lawyer if the quality is not significantly better than a seven-year qualified lawyer in India who I am paying at £40 an hour?’ says Bruce Macmillan, Dell EMEA in an interview to the International Bar Association. Dell, along with Eversheds and MIndcrest, in order to demonstrate optimal cost benefits started tepidly focusing on large scale, standard form contracts involving reviewing changes proposed by other parties. Having tasted success in this delivery model, Dell is also examining other areas where LPO could be used, such as reviews of routine advertising material – to ensure compliance with different countries’ regulations – and the administration of some of its internal legal databases. However, Macmillan at Dell is still sceptical about using LPO for anything that requires a high level of briefing per activity. “The more non-transactional it is, the higher the investment cost in getting it briefed up in the first place and the more checking and validation you need to do to make sure you have got comfort that it’s being done properly’, he argues.
Microsoft - Martin Shively, leads the worldwide IP operations of Microsoft Corporation. Shively started outsourcing to India in 2004, when he took over budget responsibility for Microsoft's patent group. At that time, there was a lot of buzz about outsourcing legal work to India; corporations like General Electric Company were doing it, and slashing their legal bills. He started with the most basic task he could think of---proofreading patent applications. Instead of paying high-priced associates to do this work at a dozen U.S. law firms that drafted Microsoft's filings, he hired one vendor in New Delhi to do them all. It was, he says, "a safe place to have a failure." If it flopped "we just wouldn't tell anyone," he laughs. But it didn't flop. "We went there to save money," he acknowledges. "We stayed and expanded because we liked the quality of the work." It wasn't just okay, it was better.
Shively began to fly to India once or twice a year to discuss plans, review the work, and build relationships. More than satisfied with the results, he pushed the volume and complexity of the tasks and hired a second firm. Soon the Indian companies had 35 people working exclusively on Microsoft projects. In July 2007, at the suggestion of his bosses, Shively moved to India himself. He points to the Indian operation's numbers: In fiscal 2005, patent work there amounted to less than $150,000. The work product continues to meet Microsoft's standards, and the cost is never more than 40 percent of what he'd pay in the United States; in some instances, it's a mere 10 to 15 percent, he says. In fiscal 2008, his company saved $6.5 million outsourcing its patent work. He's confident the savings will hit $10 million this year. In fiscal 2009 the tab was estimated to come to around $4 million.
From The Vendor Perspective: “Winners don't do different things, they do things differently.”
Infosys
...and that is exactly how LPO vendors in India today are expanding and creating a niche for themselves. Lets take the example of Infosys Technologies that ventured into the LPO space two and a half years ago, diligently building on its infrastructure and operations, and is today envisaging a growth of 20-25% for the LPO industry. According to an interview published recently by Matthew Sullivan, founder and principal at Red Bridge Strategy, Inc. on his Global Legal blog, Rahul Shah, AVP and Head, Infosys LPO spoke about the LPO market and Infosys’ niche place in it. More specifically, he believes “that full service providers like Infosys offer a very different proposition to the clients that can take the LPO industry towards maturity much faster. Infosys believes in being transformational partners with its clients leveraging consulting, technology, BPO and LPO capabilities. This helps them in the following ways:
- It provides them the scale to invest in best talent as well as significant management oversight to provide world class experience to its/firms clients.
- It enables a connect at a much higher level in the client organization – Head of Business Services in law firms and CFO’s / COO’s / GC in corporates. This enables them to make the LPO initiative much more strategic than tactical.
- It enables a mix of mature services like F&A to be in play apart from LPO services – thus bringing about proven and tested business benefits through mature services and enabling a higher appetite for the clients to do more offshoring.
Lessons Learnt
- Choosing the right vendor: A buyer must define adequate metrics against which he would like to see his vendor perform before he steps into the market to shop for a vendor. With the plethora of vendors available, some with robust infrastructure, some who have created a niche for themselves in certain areas of outsourcing and some others who are offering a broader range of options. With so many options, the buyer must have his laundry list of essentials ready at hand so that he can optimally evaluate and ultimately select the most appropriate vendor.
- Don’t limit your horizons: LPO service providers are fast ramping up their infrastructure as well as deliverables to meet the optimal level of expectations set out by their buyers and would like to secure a larger share of their clients’ legal spend and move up the value chain. The focus is now on offering end to- end solutions, rather than simply handling a defined part of a project. Buyers need to take a step forward and keep the faith.
- Buyer Vendor relationships are crucial: The success of an outsourcing relationship depends a great deal on how robust is the communication and relationship between the buyer and the vendor. There will be initial hiccups but starting in a discreet manner and road mapping not just the work but also the relationship will help create a conducive environment in which both the buyer and the vendor are on the same page as far as expectations are concerned. On their part, it is essential for a vendor to understand how the buyer works in house while for the buyer it is important to give the vendor adequate exposure to the quality of work that is expected of him. Understanding the nuances of cross cultural communication and collaboration are key requisites here.
- Don’t hesitate to ask: In tandem with my previous point, buyers should necessarily evaluate the infrastructure as well as processes before finalising a vendor. One way to do this would be going by hearsay but a more effective way would be to issue a pilot project to your top five vendors, evaluate them on certain pre-defined metrics and then get into a conversation about costs. This way, both parties would have a fair idea of what to expect.
- Don’t hesitate to say No: This is more for vendors who, many a time tend to take on work that they may be incapable of handling due to stretched resources or absence of requisite resources. Pushing back on work isn’t seen as a minus rather a conscientious decision to deliver quality rather than quantity.
(To be Continued....)
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Quite informative. Orientation in these issues will help the vendors go a long way in maintaining, expanding and sustaining the relationship with the buyer.
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